David & Boris in happier times
Well, the dust is settling on a momentous decision by the nation, but where it will fall is not yet clear.
Over recent weeks dozens of clients have asked my opinion to help them decide which way to vote. I tried very hard to be even-handed and gave my honest opinion, with as many specific examples as possible. However my advice can be summed up as voting to leave will cause short term pain, balanced by the hope of long term gain.
In talking to my clients it was clear that with most of them, it boiled down to whether or not they believed the glass was half full or half empty. Or to put it another way, did their fear of loss outweigh their hope of gain.
In my various discussions, I carefully avoided the toxic subject of immigration and concentrated on what I knew best, the probable tax and financial implications; with unknown difficulties ahead for those firms who imported or exported to the EU. I also told them of the many clients I have that live abroad, especially in EU countries such as Spain, who had informed me that the noises coming from their host counties had convinced them that the knock-on effect by us leaving, was almost certainly to be negative
I pointed out that it was likely that the pound would drop making foreign holidays more expensive, the stock market would suffer, potentially affecting their pension funds and that inward investment would reduce thus threatening jobs.
To balance this, I told them that the net savings from our huge annual net payment to the EU, around five billion pounds, would certainly ease the pain and it was probable that the petty rules and restrictions imposed by the EU, which affect day to day business life, would be eased considerably.
It is now clear, that despite the belief amongst the major financial organisations, the stock market and even the betting companies, that a narrow majority of us Brits would not be prepared to take that step into the unknown and vote to leave, was wrong.
Independence Day
So where does this leave us a day after the vote? The expected repercussions have started; Scotland wants a new referendum to leave the UK, David Cameron has resigned, the pound has fallen to its lowest value against the dollar since 1985 and the stock market is in turmoil.
In truth, apart from dearer flights and holidays, it will at least two years for the fall-out from the leave decision to have any noticeable change to the country and our economy. Once the transition period is over, it will be increasingly clear whether or not there any serious negative effects from leaving, for example countries such as the USA and Japan, moving their European bases of operation from the UK to probably Germany.
So if any of you have a crystal ball, I would appreciate you sharing it with me as at the moment, with so many possible permutations as to what might happen and the consequential repercussions, I’m as much in the dark as you are.
If you would like more detailed information on some aspect of UK Tax, send me an e-mail and I’ll be pleased to advise further.
David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.